Last year was record-breaking for buyout firms seeking to "exit" all or part of a particular portfolio company through an initial public offering or a sale to corporate buyers or other private equity firms.

But buyout firms still have a lot of divesting to do as more than 4,000 private equity-backed companies acquired in 2008 or earlier are waiting to be sold, and two longtime holdings of Chicago-based Madison Dearborn Partners LLC are no exception.

CDW Corp., of which Madison Dearborn owns 48 percent, is going public, and its Yankee Candle Co. will be shopped to a new buyer, sources familiar with the situations say. CDW, a Vernon Hills-based seller of technology products, exceeded $10 billion in sales for the first time in 2012.

Exits give buyout firms the chance to return capital to their investors, or limited partners.

With debt and equity markets strong and financing cheap and easy, it's a good time to sell because interested buyers are plentiful, driving up prices for potential targets.

These days, "if you don't overpay, you don't have a portfolio," James Quella, Blackstone Group senior managing director, said last month at the 12th annual Beecken Petty O'Keefe & Co. private equity conference in Chicago.

2012 saw 626 exits by private-equity firms. And the fourth quarter marked the highest-ever quarterly number of exits in both volume and dollar amount, according to PitchBook Data Inc., a research firm for the private equity industry and partly owned by Chicago-based investment research publisher Morningstar Inc.

"Our research shows that this backlog of companies is the result of PE firms holding on to their investments for longer," said PitchBook research director Adley Bowden.

The median holding period has increased to a record high of 5.4 years, up from 3.6 years in 2007.

"This underscores the urgency on which PE firms are acting to realize their investment gains," Bowden said.

In a December letter to investors, Madison Dearborn said it has "continued to emphasize selling portfolio companies while being highly selective with regards to new investments."

Madison Dearborn, which raised $6.5 billion in 2006 for its fifth fund, and Providence Equity took CDW private in a $7.3 billion leveraged buyout a year later. Also that year, Madison Dearborn bought Chicago-based money manager Nuveen Investments in a multibillion-dollar deal.

Of the 12 companies in that Madison Dearborn fund, 10 contributed to a 23 percent boost in the value of the fund last year.

"Notable contributors" included CDW, whose value rose by 64 percent, or by $432 million year over year.

"The only notable exception was a $92 million, or 16 percent, decline in the fair market value of Nuveen," Madison Dearborn wrote.

That drop reflected problems at a global equities unit called Tradewinds, "although that situation has now stabilized and other segments of Nuveen continue to perform well," the letter said.

Nuveen ended 2012 with assets under management of $219 billion, up from $162 billion before Madison Dearborn bought it.

A January presentation to investors says almost two-thirds of its 82 mutual funds rated by Morningstar have at least four stars.

Madison Dearborn's typical hold period is about five years.

Indeed, the Tribune reported in June 2008 that CDW and the two private equity firms had agreed on a five-year plan when the deal was consummated. Though it still has significant debt from the buyout, CDW's credit rating was recently upgraded by Moody's, which cited its "improved operating and financial performance" and a paying down of its debt.

CDW's net income rose to $119 million in 2012, up from $17.1 million the prior year.

"CDW and Nuveen are critical to fund five," said William Atwood, executive director of the Illinois State Board of Investment, a limited partner in Madison Dearborn funds. Private equity investments made in 2007 have been among the most difficult to make money in during the past 20 years because they were bought during a market peak before the recession hit, he said.

"Two or three years into it, CDW looked like it was going to be a problem," Atwood said, but they've turned it around and it could end up being a positive deal for the fund.

In 2012, Madison Dearborn returned $3.3 billion to investors through asset sales, including TransUnion, NextG Networks, BWAY and Bolthouse Farms, beating the prior year's record of a $2 billion distribution to investors.